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Our NewsletterIssue No. 43: Administration Moves Swiftly to End the Opaque System of Rebates Under the Trump Administration, the rate of growth in prices of medicines has flattened and even fallen for the first time in decades. The U.S. Bureau of Labor Statistics recently reported a decline of 1.3% in prescription drug prices in February, compared with the same month a year before – data confirmed by pharmaceutical benefit managers (PBMs) such as Express Scripts and by the research firm SSR Health. On Wednesday morning, the President’s Council of Economic Advisers Tweeted: 
And it wasn’t hype. The decline in drug prices remains the great untold story of 2019. A major reason for the dramatic change appears to be a policy ofstreamlining approvals of generic drugs, which represent about nine out of tenprescriptions filled.
Now, the Department of Health and Human Services (HHS) has taken a step that could have an even greater impact on how and how much Americans pay for medicines. On Feb. 6, HHS published a proposed rule in the Federal Register that seeks to replace rebates to PBMs and health plans with discounts to patients at the point of purchase. The rule applies only to the Medicare Part D drug benefit and to Medicaid managed care organizations, but the concept is already spreading to commercial plans. Employers believe the current system is broken, according to a survey by the National Business Group on Health last year. Three out of four employers do not believe rebates are an effective tool for driving down drug costs, and 90% would welcome an alternative to the rebate system. That system obscures actual drug costs, and it causes employees to reach deeper into their own pockets to pay for the most advanced medicines. The HHS proposal would overturn a practice that thrives on opacity and provides incentives for PBMs to drive drug manufacturers to keep raising their list prices. Under the current system, rebates are based on a percentage of the list price; the higher the prices, the greater the rebates. Read More Here. |
What Others Are Saying"The anger directed at the pharmaceutical and biotech industries overall is misdirected. The single biggest driving force for increased health-care spending in the U.S. is the rising cost of labor, not drugs." "Even if pharmaceutical spending were rising as a share of total health care spending, but that rise was due to pharmaceutical investments driving down expenditures in other health care areas (e.g. a reduced need for more expensive surgeries), then it would still be inaccurate to argue that pharmaceutical spending is driving overall health care inflation." |